US stocks drop on worries over inflation, rate hikes

NEW YORK: Wall Street stocks retreated on Wednesday (Oct 19), snapping a two-day rally as the latest jump in Treasury yields exacerbated recession worries, offsetting generally good earnings.

The yield on the 10-year US Treasury note, a proxy for Federal Reserve (Fed) interest rates, jumped above 4% following a gloomy inflation report from Britain.

“There’s nothing to suggest that inflation is going to move in the right direction,” said Tom Cahill of Ventura Wealth Management.

A downcast Federal Reserve “Beige Book” report observed rising recession fears as households grapple with soaring costs and earlier Fed interest rate increases slowing demand.

The Dow Jones Industrial Average fell 99.99 points, or 0.33%, to 30,423.81, the S&P 500 lost 24.82 points, or 0.67%, to 3,695.16 and the Nasdaq Composite dropped 91.89 points, or 0.85%, to 10,680.51.

Among individual companies, Netflix surged 13.1% as it reported gaining more than two million subscribers in the recent quarter, calming investor fears that the streaming giant was losing paying customers.

United Airlines jumped 5% as it reported strong quarterly results and offered a bullish outlook on travel demand despite headwinds in the broader economy.

Abbott Laboratories tumbled 6.5% after reporting lower-than-expected growth in international medical device sales, hit by a strong dollar and supply challenges in China. – AFP, Reuters

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